6,936 Seocho-gu residents sign second petition urging abolition of reconstruction levy regime

Seocho-gu in Seoul has escalated pressure on the central government to scrap the reconstruction excess profit recapture regime, delivering a second petition signed by 6,936 residents to the Ministry of Land, Infrastructure and Transport.

Along with the call to abolish the regime, the district also urged the ministry to issue a clear legal ruling on the levy imposition deadline for reconstruction projects, including the Banpo Hyundai apartment complex.

Seocho-gu said Monday it visited the ministry's Housing Improvement Policy Division and submitted the second petition, again urging the abolition or fundamental reform of the reconstruction excess profit recapture regime.

The petition was backed by 10 reconstruction associations in total — nine within Seocho-gu, including those for Banpo Hyundai, Banpo 3rd District, Banpo Mido 1st, Sinbanpo 2nd, 12th, 18th and 21st, Bangbae Samik and Sinseong Villa, as well as the Eunhasu reconstruction association in Yeoksam-dong, Gangnam-gu.

Seocho-gu had earlier delivered a first petition, signed by 1,286 residents, to the ministry on Wednesday. In just five days, the number of signatories for the second petition surged to 6,936, underscoring the depth of opposition among reconstruction communities and the growing demand for reform.

The district argued that the regime is unreasonable because it imposes levies on development gains that have not yet been realized, while reconstruction association members already bear costs including land donations, property holding taxes and capital gains taxes.

The district said excessive levies undermine the viability of reconstruction projects, leading to delays or cancellations and ultimately suppressing the supply of housing in urban areas. It maintained that abolishing the regime or fundamentally overhauling it is necessary to normalize reconstruction projects and boost housing supply.

During the visit, the question of a legal ruling on the reconstruction levy imposition deadline also emerged as a key issue.

At the heart of the matter is whether a special provision on the levy imposition deadline — introduced under amendments to the Act on the Recovery of Reconstruction Excess Profits that took effect March 27, 2024 — can also apply to reconstruction projects completed before the amendments came into force.

The interpretation of the imposition deadline directly affects how levies are calculated and when they are imposed. Seocho-gu warned that without a clear legal ruling, the administrative schedule for related projects — including the Banpo Hyundai apartment reconstruction — could be disrupted, and confusion over levy standards could grow.

The district accordingly sent an official letter under Seocho-gu District Mayor Jeon Seong-su's name requesting that the ministry respond with its legal ruling by Friday.

However, Seocho-gu also acknowledged the administrative reality that, even as it pushes for abolition, it has no choice but to carry out levy imposition and collection procedures under current law. As the agency delegated authority to impose and collect levies under Article 22 of the Act on the Recovery of Reconstruction Excess Profits, it is obligated to fulfill its statutory duties.

The district said it is proceeding carefully, given that this will be the first reconstruction levy ever imposed, and is closely reviewing statutory grounds for reduction and documents related to development costs in order to minimize any financial disadvantage to association members.

"The reconstruction excess profit recapture regime suppresses reconstruction projects and blocks the supply of housing in urban areas — it needs to be abolished or fundamentally reformed," Seocho-gu District Mayor Jeon Seong-su said. "I deeply regret that, even though this is a regime that should be abolished, we have no choice under current law but to impose the levy."

"A clear legal ruling on the levy imposition deadline is urgently needed, and I urge the ministry to respond to our official inquiry without delay," Jeon said. "We will continue to call on the ministry and the National Assembly to abolish the reconstruction excess profit recapture regime and improve the system, and we will be thorough in calculating and imposing levies to ensure residents do not suffer any financial disadvantage."